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Fourth-quarter earnings still leave questions unanswered about REITs' direction. Funds from operations dropped 1.5% on average and income dropped 19%. Tenants are picking up more space -- but only because of falling rents. At the same time, they are better capitalized and less in debt than a year ago.

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Five REITs were highlighted by TheStreet.com for
their "extraordinarily" high yields. They are Omega Healthcare Investors, Digital Realty Trust, Universal Health Realty Income, Annaly Capital Management and National Health Investors.

The total market capitalization of Asian REITs rose 34.5% last year as prices recovered and REITs issued new shares, according to CBRE Research Asia. In 2010, REITs are expected to return to the IPO market, it predicted.

REITs such as AvalonBay and Equity Residential are banking on a shortage of apartment buildings in the next few years. AvalonBay is among the few companies beginning development, while Equity Residential is looking toward more acquisitions.

Trends in capital markets and federal policy that are just emerging are going to manifest over the midterm, predicts Michael Farrell, chairman and CEO of Annaly Capital Markets. He believes CMBS will take off as underwriting criteria become more clear. In addition, the GSEs' role will change to one of insurer of first resort for their particular market. Also, the industry will be facing a steep yield curve for some time, he concludes. "That will mean more pressure on asset prices," he said.